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Air passengers look set to finally benefit from Ryanair’s spiralling profits and falling costs with the budget airline promising to cut fares by as much as 12 per cent.

Michael O’Leary, the airline's chief executive, announced on Monday that 2015/16 saw profits of €1.24billion (£1bn), a 43 per cent increase on the previous year, as well as a six per cent fall in costs. However, the average fare fell just one per cent to €46 (£35.50).

But the colourful businessman said Ryanair would cut fares up to seven per cent in the first half of 2016/17 and up to 12 per cent in the second half. Return flights to Porto in mid-August, for example, which currently cost from £268, could fall to £236 next year should O'Leary be good to his word.

Love him or hate him: Ryanair's Michael O'LearyCredit:
Getty

Nick Trend, Telegraph Travel's consumer expert, said passengers have so far seen little benefit from Ryanair's profits and savings.

"The airline says that its average fares fell by just one per cent. So when will travellers on the self-styled 'low fares airline' finally start to see a meaningful dividend from lower oil prices?" he asked.

If there is a fare war in Europe, then Ryanair will be the winnerMichael O'Leary

Commenting on the fact that Ryanair has "hedged", or guaranteed, the price of its fuel for the next year, which should save the airline as much as €200million, he said: "All other things being equal, Ryanair's 100 million passengers should be able to expect a four to five per cent fall in the cost of flying. I wouldn't bet on it, but I'd love to be proved wrong."

Last financial year Ryanair increased its passengers numbers from 90.6 million to 106.4 million, a rise of 18 per cent, and O’Leary is confident the airline can continue to grow its customer base.

“We see growth opportunities,” he said. “We are, on average, two per cent better booked for the peak summer months than this time last year but at lower fares.”

The airline operates on a load active/yield passive plan that means it will cut ticket prices as much as is necessary to ensure the planes are full. A slow-down after the Paris and Brussels attacks forced the carrier to lower prices, and O’Leary said he sees no reason why they won’t keep falling.

“We will take whatever price we get as long as we fill out aeroplanes,” he added. “If there is a fare war in Europe, then Ryanair will be the winner."

As the cost of fuel fell by 70 per cent over two years, the United Federation of Travel Agents (UFTAA) sent an open letter to airline accusing the industry of being “shameless” in including fuel surcharges in their prices.

Labour MP Graham Stringer said at the time: “It’s a matter for the market and the consumer to choose and move away from those airlines that are exploiting the situation.”

The research found that Ryanair and EasyJet are generally cheaper than BA, but often not by much.

Announcing the airline’s profits, Ryanair also reiterated its call for the UK to remain in the EU. It said: “If the UK leaves the EU then this, we believe, will damage economic growth and consumer confidence in the UK for the next 2 to 3 years as they begin to negotiate their exit from the EU and re-entry to the single market in very uncertain market conditions.”